Bonus Sacrifice
Bonus sacrifices (sometimes known as "bonus waivers") occur when you make a contractual agreement with your employer to waive some or all of your bonus. In return, your employer contributes a preferential (equivalent) sum into your pension plan.
How does it work?
For a bonus sacrifice to be effective, it must be 'given up' before it's subjected to tax or National Insurance (NI). This allows you to save an amount up to the entire value of your sacrificed bonus in your pension plan free of tax and NI.
Bonus sacrifice also saves your employer money, as they don't have to pay NI on your sacrificed bonus. If your employer passes some or all of these savings on to you, you'll benefit from even larger tax and NI-free contributions at no extra cost.
For these reasons, bonus sacrifice can significantly enhance the long-term value of your pension plan, as well as allowing you to enjoy considerable savings.
What you need to consider
- When contemplating a bonus sacrifice, you should also bear in mind the possible impact on your future borrowing levels, as your credit provider may take into account your reduced bonus payments.
- Sacrifice of very large sums may lead to additional taxation if they exceed the Annual Allowance or the Lifetime Allowance.
- If you are resident in the UK but not domiciled in the UK there could be specific issues that apply to you depending upon pension and taxation laws in your country of domicile.
- Barclays Wealth can work with you to develop a tailored investment and retirement plan that may, if appropriate, enable you to take advantage of the benefits of bonus sacrifice.
Find out more about bonus sacrifice
To learn more about how Barclays Wealth could help you, please contact us and we'll be in touch as soon as possible.
Tax treatment will depend on an individual’s personal circumstances and may change in the future. Barclays Wealth does not provide tax advice. If in doubt we recommend you obtain your own independent tax and legal advice tailored to your individual circumstances.
Legal information
This information is based on our understanding of current legislation, taxation law and HM Revenue & Customs (HMRC) practice, which may change in the future. The value of tax relief depends upon your individual financial circumstances.
The products and services described on this page are provided by the following company, Barclays Wealth which is the wealth management division of Barclays and operates through Barclays Bank PLC and its subsidiaries. For further information on these companies and Barclays Wealth please read the Important Information. Each Barclays Wealth company reserves the right to make a final determination on whether or not you are eligible for any particular product or service.
